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Removal of tariffs ‘very significant’ during pandemic

The Distilled Spirits Council of the US (Discus) and the Scotch Whisky Association (SWA) are urging the elimination of punitive tariffs on spirits as the US and UK begin negotiations for a free trade agreement.

The US and UK have begun negotiations for a free trade agreement

On 5 May, US trade representative Robert Lighthizer and UK secretary of state for international trade Elizabeth Truss announced the start of formal discussions in relation to a trade deal between the two nations.

The conversations will be held virtually over the next two weeks due to the coronavirus pandemic. More than 200 staff from the UK and US governments are expected to be involved in the talks from 6 May to 15 May.

Trade groups Discus and the SWA both welcomed the negotiations, but called for the removal of tariffs, which are “costing millions in lost exports”.

The tariffs, which were imposed in October 2019 in connection to the EU-US trade dispute over aircraft subsidies, resulted in a 27% decline in Scotch whisky exports to the US during the fourth quarter of 2019.

The EU also imposed a 25% retaliatory tariff on American whiskey in June 2018 due to a steel and aluminium trade dispute. As a result, exports of American whiskey to the EU market fell by 27% last year. 

Discus president and CEO Chris Swonger said: “We applaud the administration for launching trade negotiations with one of our most important trading partners and urge the administration to secure an agreement that results in the removal of additional tariffs imposed on American whiskey and UK spirits.

“In 2019, the UK ranked as the US spirits sector’s second largest single market with exports valued at US$111 million; and American whiskeys (US$101 million) accounting for 91% of the total. A US-UK trade agreement would solidify the special economic relationship that binds our two countries.”

‘Economic recovery’

SWA chief executive Karen Betts said trade must be kept “free, fair and flowing” to help the UK deal with the “human and economic costs of Covid-19”.

She said: “The difficult situation we are in on tariffs has now become much harder as our industry copes with the impact of the Covid-19 crisis too. With lockdowns across the US and Europe – critical for slowing the spread of the Covid-19 and saving lives – bars, restaurants and other venues have closed, which is very serious for the fabulous hospitality businesses we have worked with for many years and the people who work in them.

“In these difficult times, trade disputes and tariffs are compounding the damage to businesses. Scotch whisky and American whiskey distillers, bars and restaurants need to find ways through the human and economic crisis brought on by Covid-19.”

Betts added that the removal of tariffs on whiskies “would be very significant for us right now” in the wake of the pandemic.

She continued: “So, we are urging the negotiators to reach an agreement to remove all tariffs on whisky. In doing so, they will help ensure that our industry can make our full contribution to economic recovery.”

The launch of the UK-US negotiations follows an agreement reached between the two nations in January 2019 to ensure that reciprocal protection for Bourbon, Tennessee whiskey, Scotch whisky and Irish whiskey will continue uninterrupted when the UK leaves the EU.

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